IKV’s EU Information Centre, in cooperation with TÜRKONFED, organised a meeting entitled “The Customs Union Talks” in Istanbul on 21 September 2016.  Within the framework of the “Support to the EU Information Centres Network of Turkey” project, IKV Brussels Representative Haluk Nuray and TÜRKONFED Economics Adviser Pelin Yenigün Dilek discussed the current status of the Customs Union and revealed details pertaining to its ongoing modernisation process.

IKV Brussels Representative Haluk Nuray indicated that Turkey’s integration into the Customs Union had been very productive for its economy and highlighted that without the Customs Union, the Turkish economy would be in a very different situation. Stressing that thanks to Turkey’s integration into the Customs Union, its contribution to the global value chain had increased; he nonetheless explained that the current status of the Customs Union was not sufficient in dealing with the present needs.

Furthermore, Nuray also noted that the world is changing rapidly, and as such indicated the following: “We have passed from the plant production model to the production chain model. The Customs Union was a good agreement for its period. Thanks to the Customs Union, Turkey has effectively become a part of the EU production chains. However, there is also now what is called value chains. There are thus new agreements. There have been new agreements that have been signed that are outside of the scope of the Customs Union. With the agreements that the EU has signed with third countries, Turkey’s economic benefits with the EU have ended”.

Reminding that it is only the Customs Union which is organising trade between Turkey and the EU, Nuray added the following:

“The customs union only regulates the trade in industrial products. Its share is a maximum of 25% in the total trade between the parties. The EU is willing also to invest in other areas such as agriculture and services. As for us Turkey, we would like to find a solution to the issues raised by the current status of the agreement and at the same time secure trade advantages in the EU market vis-à-vis third countries. We are hoping that a new reform process can begin in Turkey with the modernisation of the Customs Union. However, the EU is more willing to create partnership in areas of interest such as the refugee crisis. These partnerships are in a way replacing or acting in place of the membership process. Personally, I do believe that the latest developments with respect to the Cyprus issue are critical in shaping the future of relations. I think that we can continue the process if a solution is found to the Cyprus issue”.

TÜRKONFED Economy Adviser Pelin Yenigün Dilek referred to the ongoing discussions with respect to Brexit and its consequences and how discussions pertaining to regional integration are going to evolve. Moreover, she shared the views of economists which express the opinion that the globalisation trend in the world is not being supported institutionally speaking and that as such globalisation in itself is not sufficient, highlighting the need to see democratisation as the main objective.

Explaining that there are some complaints regarding the way the euro has been organised once it was first launched in the EU, Dilek added that there has as of yet not been established an institutional structure in order to support the euro.

Dilek noted the following:

“The euro was launched to unify the EU. Therefore, common financial institutions were needed but the process has not gone in that way and we are now seeing the current problems with respect to the EU. If economic integration cannot be pursued in parallel to political integration, the system’s equilibrium point can be destabilised and some problems may arise. As we can see in the case of Brexit, regional integration policies are not providing equal benefits to all regions. The system cannot function effectively when the institutions are not sufficiently established. As one can see in the Brexit problem, there is also the criticism that economic integration is only benefiting a small fraction of society. The EU needs to be much more harmonious from the current system from the financial and political perspective”.